Correlation Between Dawushan Farm and Hung Sheng
Can any of the company-specific risk be diversified away by investing in both Dawushan Farm and Hung Sheng at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Dawushan Farm and Hung Sheng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dawushan Farm Tech and Hung Sheng Construction, you can compare the effects of market volatilities on Dawushan Farm and Hung Sheng and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Dawushan Farm with a short position of Hung Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dawushan Farm and Hung Sheng.
Diversification Opportunities for Dawushan Farm and Hung Sheng
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dawushan and Hung is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Dawushan Farm Tech and Hung Sheng Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hung Sheng Construction and Dawushan Farm is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Dawushan Farm Tech are associated (or correlated) with Hung Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hung Sheng Construction has no effect on the direction of Dawushan Farm i.e., Dawushan Farm and Hung Sheng go up and down completely randomly.
Pair Corralation between Dawushan Farm and Hung Sheng
Assuming the 90 days trading horizon Dawushan Farm Tech is expected to generate 1.38 times more return on investment than Hung Sheng. However, Dawushan Farm is 1.38 times more volatile than Hung Sheng Construction. It trades about 0.07 of its potential returns per unit of risk. Hung Sheng Construction is currently generating about 0.08 per unit of risk. If you would invest 4,650 in Dawushan Farm Tech on August 30, 2024 and sell it today you would earn a total of 140.00 from holding Dawushan Farm Tech or generate 3.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dawushan Farm Tech vs. Hung Sheng Construction
Performance |
| Timeline |
| Dawushan Farm Tech |
| Hung Sheng Construction |
Dawushan Farm and Hung Sheng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dawushan Farm and Hung Sheng
The main advantage of trading using opposite Dawushan Farm and Hung Sheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dawushan Farm position performs unexpectedly, Hung Sheng can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Hung Sheng will offset losses from the drop in Hung Sheng's long position.| Dawushan Farm vs. Taiwan Chinsan Electronic | Dawushan Farm vs. Shan Loong Transportation Co | Dawushan Farm vs. Bright Led Electronics | Dawushan Farm vs. Voltronic Power Technology |
| Hung Sheng vs. Tainan Spinning Co | Hung Sheng vs. Carnival Industrial Corp | Hung Sheng vs. Symtek Automation Asia | Hung Sheng vs. CTCI Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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